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Thursday, November 10, 2016

Prime Minister Narendra's Modi's sudden announcement of demonetizing the currency notes of Rs 500 and Rs 1,000 was just a sudden announcement but was very well thought and well planned strategy, according to sources it took around 10 months to execute the plan and finally on the eve of 8th November Prime Minister Modi decided to play his master stroke.

New 500, 2000 currency notes of RBI

Modi was well informed about the temporary cash crunch going to happen just after the announcement of demonetizing of 500 and 1000 notes. So, he thought of introducing new currency notes of 500 and 2000. The master stroke played by Mr Modi is considered a strategy to root out multiple menace rampant in the country.

People with huge amounts stashing big notes in their homes mostly unaccounted will now be bound to get them deposited to banks or post offices, thus reducing the in-house black money. Govt has also declared that all cash deposited above 2.5 lakhs will be keenly watched by IT dept and cash deposited above 10 lakhs will be fined up to 200% of the taxable amount.

The demonetization will also root out the menace of fake currency notes of 500 and 2000 widely spread in the country.

There is a story behind this announcement and how one man named Anil Bokil, who was given just nine minutes to speak, resulted in the massive assault on black money.

The man Anil Bokil behind the demonetization proposal of 500 and 1000 notes

Anil Bokil of Arthkranti, a Pune based financial think tank is the man who reportedly suggested some of the key measure to contain the flow of black money in economy and banning the big currency notes was one of them. Bokil who reportedly had met PM Modi, a few months back to give a presentation on financial reforms and how to contain the flow of black money. He was given time of just nine minutes to finish his argument, but PM Modi reportedly found his arguments so interesting that he kept discussing for almost two hours.

These were the main recommendations by Bokil:

Except import duty, stop collection of money under 56 different taxes

Ban big currency notes of Rs 1000, Rs 500 and even Rs 100

All transactions should take place via bank with help of cheque, Demand Draft and online.

Single banking system for revenue collection.

The reason Bokil reportedly gave behind these suggestions

In India, an average transaction of Rs 2.7 lakh crore is seen daily which accounts to Rs 800 lakh crore in a year. But only 20 per cent transaction out of this happens via banks, rest all takes place via cash which can't be traced.